Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether 6801(d) rules apply to a person who ceased to be a corporation director and then re-hired by the corporation to perform employment duties?
Position: No.
Reasons: Wording of the Act.
XXXXXXXXXX
5-982744
Attention: XXXXXXXXXX Fouad Daaboul
March 8, 1999
Dear Sirs:
Re: Regulation 6801(d)
This is in reply to your facsimile submission of October 22, 1998, wherein you requested confirmation of your understanding of the Department’s general views with respect to paragraph 6801(d) of the of the Income Tax Regulations (the “Regulations”). Your situation involves a director of a corporation who ceases to be a director and becomes an employee of the corporation. You believe that such a change of employment duty is a retirement or loss of office or employment for the purposes of subparagraph 6801(d)(i) of the Regulations.
As indicated in Information Circular 70-6R3, confirmation of the tax consequences flowing from completed transactions must be obtained from your local tax services office. This Directorate will provide a technical interpretation concerning the provisions of the Income Tax Act (the “Act”) and Regulations but not with respect to specific factual or hypothetical transactions. We may, however, provide the following general comments concerning the provisions of the Act, in accordance with the above-mentioned Information Circular, which are not binding on the Department.
It is the Department’s view that the interpretation given to the terms “retirement” and “loss of an office” for purposes of defining a retiring allowance are generally appropriate for the purposes of paragraph 6801(d) of the Regulations. As stated in Interpretation Bulletin IT-337R3, retirement or loss of an office or employment does not include transfer from one office or position to another with the same employer, in a different capacity. Thus, where a person ceases to hold the position of a corporation director and subsequently commences to perform duties of employment for the same corporation or any related corporation thereto, it is the Department’s view that the person is not considered to have retired from or lost the office or employment with that corporation or any related corporation thereto.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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